Transcript
s
On Point Jakarta Property Market Review
Second Quarter 2016
1 JLL | Research Report Jakarta Property Market Review 2Q14
ASIA PACIFIC Dr Jane Murray Head of Research – Asia Pacific +852 2846 5274 jane.murray@ap.jll.com GREATER CHINA HONG KONG Denis Ma Head of Research – Hong Kong +852 2846 5276 Denis.ma@ap.jll.com BEIJING Steven Mc Cord Head of Research – Beijing +86 10 5922 1379 Steven.mccord@ap.jll.com SHANGHAI Joe Zhou Head of Research – Shanghai +86 21 6133 5451 joe.zhou@ap.jll.com
GUANGZHOU Silvia Zheng Manager +86 20 3891 1238 silvia.zeng@ap.jll.com NORTH ASIA JAPAN Takeshi Akagi Head of Research – Japan +81 3 5501 9235 takeshi.akagi@ap.jll.com KOREA Yongmin Lee Head of Research – South Korea +82 2 3704 8836 yongmin.lee@ap.jll.com
SOUTH EAST ASIA SINGAPORE Dr Chua Yang Liang Head of Research – South East Asia & Singapore +65 6539 9814 yangliang.chua@ap.jll.com
INDONESIA James Taylor Head of Research – Indonesia +62 21 2922 3888 james.taylor@ap.jll.com THE PHILIPPINES Claro Cordero Head of Research – Philippines +63 2 729 5642 claro.cordero@ap.jll.com THAILAND Andrew Gulbrandson Head of Research – Thailand +66 2 902 0887 Andrew.gulbrandson@ap.jll.com VIETNAM Joseph Yee Regional Director, Valuation Advisory +84 8 3910 3968 Joseph.yee@ap.jll.com INDIA Ashutosh Limaye Head – Research & REIS +91 22 2482 8400 ashutosh.limaye@ap.jll.com AUSTRALIA David Rees Head of Research – Australasia +61 2 9220 8514 david.rees@ap.jll.com NEW ZEALAND Chris Dibble Researching and Consulting Manager +64 9 366 1666 chris.dibble@ap.jll.com
Jones Lang LaSalle Research Asia Pacific
2 JLL | Research Report Jakarta Property Market Review 2Q14
Jakarta Property Market Review Second Quarter of 2016
TABLE OF CONTENTS I. The Economy………………………………………………………………………..02 II. CBD Office Market …………………………………………………………………03
III. Non CBD Office Market…………………………………………………………….05 IV. Retail Market……………………………………………………………………….. 07 V. Residential Market…………………………………………………………………. 09
Copyright © JLL 2016. All rights reserved.
No part of this publication may be reproduced or copied without prior written permission from JLL. The information in this publication should be regarded solely as a general guide. Whilst care has been taken in its preparation, no representation is made or responsibility accepted for the accuracy of the whole or any part.
2 JLL | Research Report Jakarta Property Market Review 2Q16
The Economy Following on from what was a challenging year in 2015, there are signs of improvements in 2016. Infrastructure spending picked up in late 2015, the rupiah improved significantly against the US dollar and stabilised in 1H16 and the Joko ‘Jokowi’ Widodo administration seems to be making some headway in terms of easing bureaucracy and cutting red tape. However, while the mood is brighter, improvements do not, as yet, appear to be significantly reflected in headline economic growth figures (2Q16 GDP growth figures had not been released at the time of writing).
While Brexit made the headlines globally, we believe the impact on Indonesia will be limited. The UK accounts for just 1% of exports and 5% of imports although Indonesia could be impacted if larger trading partners and/or the broader global economy suffered – but negative effects would likely be proportional to global trends. One concern in the event of a global shock such as Brexit would be capital flight to safety from emerging markets such as Indonesia. However, the rupiah (also JCI) performed well since Brexit – largely due the announcement of a tax amnesty. This emphasizes that the market views more immediate, local issues as more relevant than Brexit.
The long awaited tax amnesty bill was passed and became effective in June. The tax amnesty Law is a waiver of tax due, administrative sanctions, and tax crime sanctions. Tax rates of 2%, 3% and 5% have been reported for funds repatriated respectively in the first, second and third quarters from 1st July 2016, while tax rates of 4%, 6% and 10% respectively would be applicable for non-repatriated declarations.
The tax amnesty’s potential impact on the market is huge. It is intended to accelerate economic growth and restructuring through asset repatriation, boost fairer tax reforms with an expanded tax base, and increase tax revenue to fund development in the country. According to Bank Indonesia, it is estimated that IDR 560 trillion (approximately USD 43 billion) could be repatriated and GDP growth could be boosted by up to 0.3 percentage points.
It was previously suggested that repatriated assets would be required to be invested in government bonds for a period of one year but the regulations suggest that the declared funds may be invested in the broader economy – including other investment vehicles and, potentially, real estate. The benchmark interest rate has now been cut four times (25 basis points each time) in 2016 and now stands at 6.5%. It has been reported that from end-August 2016, the seven day floating reverse repo rate will be adopted as the benchmark rate, meaning further reductions are likely. Interest rate cuts have yet to translate into lower mortgage rates.
USD/IDR exchange rate
Source: Bank Indonesia Inflation and Interest Rate
Source: Bank Indonesia
Quarterly GDP Growth (National)
Source: Oxford Economics, July 2016
13,180
7,000
9,000
11,000
13,000
15,000
17,000
Dec
-08
Mar
-09
Jun-
09S
ep-0
9D
ec-0
9M
ar-1
0Ju
n-10
Sep
-10
Dec
-10
Mar
-11
Jun-
11S
ep-1
1D
ec-1
1M
ar-1
2Ju
n-12
Sep
-12
Dec
-12
Mar
-13
Jun-
13S
ep-1
3D
ec-1
3M
ar-1
4Ju
n-14
Sep
-14
Dec
-14
Mar
-15
Jun-
15S
ep-1
5D
ec-1
5M
ar-1
6Ju
n-16
IDR
per
US
D
3,45%
6.50%
0%
2%
4%
6%
8%
10%
Dec
-11
Mar
-12
Jun-
12
Sep
-12
Dec
-12
Mar
-13
Jun-
13
Sep
-13
Dec
-13
Mar
-14
Jun-
14
Sep
-14
Dec
-14
Mar
-15
Jun-
15
Sep
-15
Dec
-15
Mar
-16
Jun-
16
Inflation BI Rate
Q22014 Q32014 Q42014 Q12015 Q22015 Q32015 Q42015 Q12016 Q22016
4.6
4.6
4.7
4.7
4.8
4.8
4.9
4.9
5.0
5.0
5.1
%
3 JLL | Research Report Jakarta Property Market Review 2Q16
CBD Office
Demand
The packed supply schedule and falling rents are such
that grade A affordability and availability of space are
improving to the extent that some tenants are opting to
upgrade from their existing premises. As such, net
absorption was, once again negative in the grade B and
C markets in 2Q16 while the grade A market saw
positive net absorption.
Follow several quarters of leasing activity, a number of
e-commerce firms continued expanding in 2Q16. Space
requirements for these kinds of tenants are currently in
the 1 – 3,000 sqm range but there is potential for strong
growth. However, the oil & gas and mining sectors
remained weak and there are few such firms, local or
international that are not in downsizing mode.
While leasing sentiment is improved on that witnessed
towards the end of 2015, tenants are aware of the
bargaining power which they possess and landlords
willing to offer significant discounts are best positioned
to secure tenants and boost occupancy levels.
Reflecting this, two projects completed in 2H15, offering
significant discounts on market rents, are now reporting
occupancy levels of above 60%.
Net Absorption
Source: JLL Research
Supply
After limited supply in 2014, two more completions in
2Q16 meant that we have now seen new supply in the
CBD for six quarters in succession. New supply this
quarter totaled around 140,000 sqm of premium grade
A space.
Capital Place, with approximately 90,000 sqm of SGA
was developed by Singapore sovereign wealth fund
GIC. This project is located on Gatot Subroto in the CBD
and will ultimately have direct access to the Sudirman
Central Business District (SCBD) – arguably Jakarta’s
most desirable commercial location.
International Finance Centre Tower 2 (IFC 2) is located
on Sudirman, Jakarta’s primary north-south arterial
thoroughfare. This 50,000 sqm (SGA) project was
developed by Singapore’s Keppel Land and is located
directly adjacent to tower 1 of the same development.
Supply, Demand and Occupancy
Source: JLL Research
Rents
Landlords are acutely aware of the supply situation and
many have been lowering quotations in order to boost
occupancy levels. Rising vacancy rates have meant that
tenants’ options are increasing by the quarter and those
looking for space remain at an advantage in rental
negotiations. Grade A rents continued to fall in 2Q16 (-
2.8% q-o-q).
Historically, some smaller local firms or back-office
operations chose to locate outside of the CBD due to
attractive rental levels. However, the huge volume of
pipeline supply and decreasing rents in the CBD are
-50,000
0
50,000
100,000
150,000
200,000
1Q
08
3Q
08
1Q
09
3Q
09
1Q
10
3Q
10
1Q
11
3Q
11
1Q
12
3Q
12
1Q
13
3Q
13
1Q
14
3Q
14
1Q
15
3Q
15
1Q
16
Sqm
Grade A Grade B Grade C
60%
65%
70%
75%
80%
85%
90%
95%
100%
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
1H
16
Occupancy
Sqm
Net Absorption New Supply Occupancy
Enquiry levels remained healthy in 2Q16 and the
e-commerce sector continued expanding. More
new supply caused occupancy to fall further.
The current supply boom, which started in early
2015 is such that we have now seen new grade
A completions in each quarter since 1Q15.
4 JLL | Research Report Jakarta Property Market Review 2Q16
such that these tenants may increasingly view projects
in core locations as viable options.
Net Achievable Rent
Source: JLL Research
Outlook Only half way through the year and 2016 is already a
record year in terms of supply; several more completions
in the remainder of the year are expected to put further
downward pressure on occupancy levels.
Demand from the oil & gas and mining sectors is likely
to remain weak. The performance of other sectors is
likely to be mixed with further expansion demand from
e-commerce firms and continued enquiries from banks,
insurance companies, law firms and professional
services. We expect upgrade demand to remain a theme
as the packed supply pipeline and falling rents provide
tenants with more options. Continued competition
between CBD and non-CBD projects is also likely.
Vacancy rates are set to remain comfortably in double
digits as more new supply enters the market. As such,
we expect landlords to remain flexible and further single
digit quarterly rental decreases are likely over the next
12 months.
Historically, few en-bloc transactions involving prime
assets have been closed in Jakarta and while this is
likely to continue to be the case in 2016, interest is likely
to remain strong. Forward purchases or development
projects are expected to continue to be the most likely
point of entry for interested parties.
Demand and Occupancy Outlook
Source: JLL Research
Rental Outlook
Source: JLL Research
CBD rental clock
Source: JLL Research
0
100,000
200,000
300,000
400,000
500,000
1Q
08
3Q
08
1Q
09
3Q
09
1Q
10
3Q
10
1Q
11
3Q
11
1Q
12
3Q
12
1Q
13
3Q
13
1Q
14
3Q
14
1Q
15
3Q
15
1Q
16
IDR
/sqm
/mth
Grade A Grade B Grade C Grade Premium
0%
20%
40%
60%
80%
100%
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
Occupancy
Sqm
Net Absorption New Supply Occupancy
0
100,000
200,000
300,000
400,000
500,000
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
IDR
/sqm
/mth
Premium Grade A
Growth
Slowing
Rents
Falling
Rents
Rising
Decline
Slowing
Jakarta
2020
Jakarta
2016
5 JLL | Research Report Jakarta Property Market Review 2Q16
Non-CBD Office
Demand
Our coverage of the Non-CBD market encapsulates
North, South, East, West and Central Jakarta as well as
TB Simatupang - which is captured in the South Jakarta
dataset. It is important to make this distinction, as the
demand profile in these different geographies varies. In
North, East, West and Central Jakarta the demand
profile is one of smaller, local companies which do not
necessarily need to occupy space in prime buildings in
the best locations. Many buildings in these areas are
strata-title sold. South Jakarta/TB Simatupang, on the
other hand, shares a more similar demand profile to the
CBD due to proximity to core Jakarta and the presence
of some high quality buildings.
Downsizing activities from oil & gas and mining firms in
the CBD has been mirrored in non-CBD locations such
as TB Simatupang. However, high quality buildings at
relatively low rental levels continued to attract tenants
from a broad spectrum of industries.
Nevertheless, TB Simatupang landlords (as well as non-
CBD landlords more generally) are increasingly
becoming aware that falling rents in the CBD mean that
some non-CBD tenants are increasingly viewing some
CBD projects as viable alternatives.
Net Absorption
Source: JLL Research
Supply
Four new projects were completed in 2Q16 adding more
than 120,000 sqm to total stock. Around 75% of the
newly completed space (90,000 sqm) was located North
Jakarta. Altira Business Park (51,600 sqm) is located
near the port at Tanjung Priok and Office Tower @ The
Mansion (38,100 sqm) is located in Kemayoran. Pre-
commitment levels in these projects averaged around
20%.
The other two new completions were located in South
Jakarta. Nariba Business Suites (5,525 sqm), located in
Mampang, was fully leased to a call centre while ITS
tower (28,150 sqm) reported pre-commitment levels of
30%.
Supply, Demand and Occupancy
Source: JLL Research
-10,000
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
1Q
08
3Q
08
1Q
09
3Q
09
1Q
10
3Q
10
1Q
11
3Q
11
1Q
12
3Q
12
1Q
13
3Q
13
1Q
14
3Q
14
1Q
15
3Q
15
1Q
16
Sqm
Grade B Grade C
60%
65%
70%
75%
80%
85%
90%
95%
100%
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
-1H
Occupancy
Sqm
New Supply Net Take-up Occupancy
TB Simatupang and South Jakarta occupancy
levels stabilised in 2Q16 while North Jakarta saw
supply cause the occupancy rate to drop sharply. Four new projects were completed in 2Q16.
Around 75% of the 120,000 sqm of newly
delivered space is North Jakarta.
6 JLL | Research Report Jakarta Property Market Review 2Q16
Rents
While occupancy levels in South Jakarta and TB
Simatupang have now stabilized after falling sharply in
2015, occupancy levels remain relatively low. Landlords
in these areas also continue to compete with the CBD
where rents and occupancy levels continue to fall. In the
face of this competition, TB Simatupang landlords
continued to lower quotations in 2Q16 and average rents
came down by around 1.5% q-o-q.
In other non-CBD locations, where occupancy levels
remained healthy, landlords were able to hold rents
steady, meaning a stable scenario q-o-q. North Jakarta
rents also remained stable despite occupancy falling
dramatically. This decrease, however, must be seen in
context. The North Jakarta basket is relatively small
meaning new completions have the potential to skew
occupancy levels. Existing projects continued to report
healthy occupancy levels.
Net Achievable Rent
Source: JLL Research
Outlook As with the situation in the CBD, a large volume of new
supply is likely over the forecast horizon with more than
800,000 sqm expected to be delivered in non-CBD
locations up to 2020. South Jakarta is expected to see
receive more than 350,000 sqm (2016 – 2020) with the
bulk of the South Jakarta supply (230,000 sqm) set to be
completed in TB Simatupang.
As new CBD supply comes online, occupancy falls and
rental rates are lowered, we expect to see sustained
competition between some CBD and non-CBD projects.
Some tenants may relocate depending on their cost and
space requirements. Firms which may otherwise have
chosen non-CBD locations may increasingly view
cheaper CBD projects as viable alternatives. Other firms
may continue to be attracted by relatively cheap rental
quotations in non-CBD locations.
In the short-term, we may see further minor rental
compression in South Jakarta and TB Simatupang as
new supply comes on line and puts downward pressure
on occupancy. However, medium-to long term, we feel
that there is room for some rental growth as we expect
sustained demand from smaller local firms, back office
operations and companies that do not necessarily need
prime office buildings in the best locations.
0
25,000
50,000
75,000
100,000
125,000
150,000
175,000
200,000
1Q
10
3Q
10
1Q
11
3Q
11
1Q
12
3Q
12
1Q
13
3Q
13
1Q
14
3Q
14
1Q
15
3Q
15
1Q
16
IDR
/sqm
/mth
Central Jakarta South Jakarta North Jakarta
East Jakarta West Jakarta TB Simatupang
Relatively low occupancy levels and increasing
competition with the CBD caused TB
Simatupang rents to fall by 1.5% q-o-q.
7 JLL | Research Report Jakarta Property Market Review 2Q16
Retail Market
Demand
Net absorption tends to be supply driven in the Jakarta
prime retail market. A moratorium on stand-alone retail
development in core-Jakarta has been in place since
2011, meaning recent years have seen little new supply
entering the market. As such, occupancy levels have
remained high and demand remains supply driven.
Spikes in net absorption in recent quarters have been
driven by take-up in new or recent completions.
As new supply has been extremely limited in recent
years, occupancy levels have remained consistently
healthy. Landlords of top performing malls continued to
report waiting lists for prime units in 2Q16. Given the
lack of available space in core areas of the city,
retailers may begin to explore options in Greater
Jakarta or further afield which are not impacted by the
moratorium.
F&B remained the most active segment in 2Q16 while
the performance of luxury and fashion brands was
mixed.
Retail Net Absorption
Source: JLL Research
Supply
While the previously discussed moratorium is not
official policy, the situation is such that the Jakarta
governor is extremely selective in signing off on new
retail projects in core areas of the city. It has been
reported that projects in the east of the city are more
likely to gain approval than those elsewhere as the
market is less developed in that area.
Bassura City was completed in 2Q16. This 29,000 sqm
East Jakarta project is part of a mixed-use development
by Synthesis Development. Already 90% occupied by
mostly lower-middle and F&B tenants, this mall is likely
to service local community rather than attract footfall
from further afield.
Supply, Demand and Occupancy
Source: JLL Research
Rents
2015 was a challenging year in the consumer market
with anecdotal evidence suggesting smaller consumer
basket sizes and reduced revenues. However, the lack
of supply and consistently healthy occupancy levels
were such that rents continued on their upward
trajectory. 2016 has seen a continuation of this trend,
with landlords able to achieve low, single digit quarterly
rental hikes. Growth of 1.3% q-o-q in 1Q16 was followed
by 1.5% q-o-q growth in the second quarter.
-20,000
0
20,000
40,000
60,000
80,000
100,000
120,000
1Q
08
3Q
08
1Q
09
3Q
09
1Q
10
3Q
10
1Q
11
3Q
11
1Q
12
3Q
12
1Q
13
3Q
13
1Q
14
3Q
14
1Q
15
3Q
15
1Q
16
Sqm
60%
70%
80%
90%
100%
0
50,000
100,000
150,000
200,000
250,000
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
1H
Occupancy
Sqm
Net Take-up New Supply Occupancy
Demand remains supply driven in Jakarta and a
non-prime completion in 2Q16 caused a spike in
net absorption.
A rare new mall was delivered in 2Q16.
Bassura City is part of a mixed-use
development in East Jakarta.
8 JLL | Research Report Jakarta Property Market Review 2Q16
With persistent low vacancy rates and a thin supply
schedule coupled with a huge, growing population and
expanding middle-class, many would expect rental
growth to take-off; this, however, has not been the case.
Several large retail groups, such as MAP, operate in
Indonesia with many brands under their umbrella. As
such, these groups are able to leverage significant
bargaining power and keep rental hikes to a relative
minimum.
Landlords of top performing malls continued to be able
to hike up rents and enjoy strong visitor traffic. Those
landlords of poorer performing malls continued to re-jig
tenant mixes in order to attract footfall.
Retail Rents
Source: JLL Research
Outlook
Extremely limited supply is likely to mean a continuation
of the historical trend and low vacancy rates are likely to
persist over the five year forecast horizon. We expect
F&B to continue to be the most active retail segment.
With no end to the moratorium on stand-alone retail
development in Jakarta’s CBD in sight, supply is
expected to be thin over the next five years. Central Park
Extension (44,000 sqm) is earmarked for completion in
early 2016. Developed by Agung Podomoro, this mixed-
use development in the west of the city comprises retail
and SOHO space adjacent to the existing Central Park
development.
Despite low vacancy rates and limited supply, rental
growth is unlikely to spike significantly although single-
digit annual rental growth is likely over the forecast
horizon. Landlords are likely to continue to favour a
strategy of long term stability over short term gain and
many may be willing to forgo big rental hikes in favour of
stable occupancy.
50,000
150,000
250,000
350,000
450,000
550,000
650,000
4Q08
2Q09
4Q09
2Q10
4Q10
2Q11
4Q11
2Q12
4Q12
2Q13
4Q13
2Q14
4Q14
2Q15
4Q15
IDR
per
sqm
per
mon
th
Upper Middle Middle Low
Rents continued to grow slowly and steadily in
the prime retail market with 2Q16 q-o-q growth
coming in at 1.5%.
The historical themes of limited supply, healthy
occupancy levels and slow steady rental growth
are likely to continue over the forecast horizon.
9 JLL | Research Report Jakarta Property Market Review 2Q16
Residential Market
Condominium Demand & Supply
The luxury sales market remained weak in 2Q16.
Sentiment is yet to recover after macroeconomic
headwinds and rupiah depreciation in 2015 and current
luxury and super luxury tax measures continue to instill
caution in buyers. The super luxury tax threshold (IDR 5
billion) is, illogically, lower than its luxury counterpart
(IDR 10 billion) and fear of being subject to an audit is
putting off would-be buyers of super luxury products.
Demand remained strongest in the middle and middle-
low segments where affordability is greater and the tax
burden lower.
A number of recent regulations are likely to boost
residential sales. The benchmark interest rate was
reduced by 25 basis points for the fourth time this year
and now stands at 6.5%. However, this is yet to translate
into lower mortgage rates. The loan to value (LTV) ratio
was once again relaxed and adjustments to mortgage
regulations now allow for off-plan borrowing. The effects
of these regulations are likely to be felt strongest in the
middle and middle-lower segments were buyers rely
more on loans.
Easily the biggest news of the quarter was the tax
amnesty. The regulations allow for repatriated funds to
be invested in a number of investment vehicles
including, potentially, real estate. This could ultimately
provide a huge boost to the condominium market in
general and, more specifically the luxury market.
In the sales market, demand thinned out in the luxury
market in 2Q15 and few high-end units have been
offered to the market since that time. All seven new
launches in 2Q16 were middle and lower-middle
projects.
Condominium sales
Source: JLL Research
Condominium Launches
Source: JLL Research
Condominium Supply by Area
Source: JLL Research
Condominium prices
In what continues to be an environment of relatively
weak demand and slow sales, prices remained flat in the
luxury market.
In the middle and middle-low segments, where some
demand remains, prices either remained flat or edged up
slightly.
0
1,000
2,000
3,000
4,000
5,000
6,000
1Q
08
3Q
08
1Q
09
3Q
09
1Q
10
3Q
10
1Q
11
3Q
11
1Q
12
3Q
12
1Q
13
3Q
13
1Q
14
3Q
14
1Q
15
3Q
15
1Q
16
Units
0
1,000
2,000
3,000
4,000
5,000
1Q
12
2Q
12
3Q
12
4Q
12
1Q
13
2Q
13
3Q
13
4Q
13
1Q
14
2Q
14
3Q
14
4Q
14
1Q
15
2Q
15
3Q
15
4Q
15
1Q
16
2Q
16
Un
its
Upper Middle Lower Middle
12%
18%
24%
19%4%
23%
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
2008 2009 2010 2011 2012 2013 2014 2015 2016 -2QCentral Jakarta South Jakarta North Jakarta
West Jakarta East Jakarta CBD Jakarta
Tax amnesty finally announced; government
continues to implement measures to stimulate
the market.
Luxury market prices did not increase in 2015
and continued to remain unmoved in the first
half of 2016.
10 JLL | Research Report Jakarta Property Market Review 2Q16
Even with relatively weak demand, particularly for luxury
projects, it is unlikely that we will see any price
decreases in the primary market. Developers prefer to
push prices up over time to appease early-bird buyers
and if demand should remain weak, they are more likely
to delay project launches until such a time that the
market improves.
Condominium prices
Source: JLL Research
Outlook
Strong underlying fundamentals indicate that the
medium to long term potential for the Jakarta residential
market remains strong. We believe that persisting weak
demand is due to sentiment rather than affordability and
several factors would go a long way towards boosting
demand. Continued stability in the USD/IDR exchange
rate, an improving macroeconomic environment and
clear, consistent communication on future adjustments
to taxes would improve buyers’ confidence.
A stable or improving rupiah would go some way
towards boosting sentiment in the Jakarta
condominium market.
While the impact from recent regulations regarding non-
Indonesians buying property is likely to be limited, the
potential positive impact of the much-discussed tax
amnesty is huge.
Short-term demand for condominiums is likely to
continue to be strongest in the lower-middle and middle
segments where affordability is greater and the tax
burden lower. We believe any lull in residential sales
would only be a short-term blip rather than a long term
trend as Jakarta’s huge, growing population and
expanding middle class provides the fundamental
demand.
While supportive regulations, such as LTV ratio
adjustments and alterations to mortgage regulations, are
to be welcomed, current taxes continue to hamper the
market. We believe further adjustments to luxury and
super luxury taxes are necessary for the luxury market
to reach its potential.
0
10,000,000
20,000,000
30,000,000
40,000,000
50,000,000
60,000,000
70,000,000
1Q
09
3Q
09
1Q
10
3Q
10
1Q
11
3Q
11
1Q
12
3Q
12
1Q
13
3Q
13
1Q
14
3Q
14
1Q
15
3Q
15
1Q
16
IDR
per
sqm
Lower middle Middle UpperHigh-end Luxury
11 JLL | Research Report Jakarta Property Market Review 2Q16
Glossary
Office Glossary
The CBD sub-market is the commercial area bounded by Jl Sudirman-Thamrin, Jl Gatot Subroto and Jl HR Rasuna Said (Kuningan).
The Non-CBD sub-market covers the commercial areas outside the CBD, which are classified by municipality, i.e. Central Jakarta, South Jakarta, East Jakarta, West Jakarta and North Jakarta.
The net absorption (take-up) rate refers to the net cumulative increase in space occupied in a particular period.
Prime refers to a property that is rated most highly in terms of quality, location, facilities, etc.
Vacancy rate refers to the ratio of vacant space to the total stock (leasable area) available.
Gross rent refers to the total rental payable by tenants. This is equivalent to the sum of net rental plus outgoings.
Base rental is the minimum rental payable for an office space without taking into account any add-ons, such as service charge and after-hours utility costs that make up the total lease package.
Service charge is the collective name for the cost of air-conditioning, other services and management charges passed on to tenants.
Retail Glossary
Rental shopping malls are shopping centres that are offered for lease by the landlord on a monthly basis. The typical lease term for a specialty store is between one and three years.
Strata-title trade centres are shopping centres that are offered for sale by the developer. A trade centre mostly consists of small kiosks that typically range from 4-20 sqm.
The net absorption (take-up) rate refers to the net cumulative increase in space occupied in a particular period.
Prime retail space refers to space in a mall that is located in prime areas (i.e. lobby level up to the first three floors).
Vacancy rate is the ratio of vacant space to the total stock (leasable area) available.
Gross rental refers to the total rental payable by tenants. This is equivalent to the sum of net rental plus outgoings.
Base rental is the minimum rental for a retail space without taking into account any add-ons, such as service charges and after-hours utility costs that make up the total lease package.
Service charge is the collective name for the cost of air-conditioning and other services, and management charges passed on to the tenant.
Residential Glossary
Condominiums are a form of multi-stories dwelling comprising units that are offered for sale by the developer. Each unit is owned by a different person and the common areas are owned jointly by all such individual owners.
Apartments are a type of accommodation (in Jakarta, they are typically in a high-rise residential building) that is built purposely for rent.
Net absorption (take-up) rate for apartments refers to the net cumulative increase in the number of occupied units over a particular period; for condominiums, it refers to the net sales in the quarter.
Vacancy rates for apartments refers to the ratio of vacant units to the total stock (leasable units) available; for condominiums, it refers to the ratio of total unsold units to the total stock over a particular period.
Base rental for apartments refers to the minimum rental for an apartment unit without taking into account any add-ons, such as service charges, that make up the total lease package.
Service charges for apartments refers to the collective name for the cost of public utilities and maintenance, including management charges passed on to the tenant.
12 JLL | Research Report Jakarta Property Market Review 2Q16
About JLL Research
JLL Research is a multi-disciplinary professional group with core competencies in economics, real estate market analysis and forecasting, locational analysis and investment strategy. The group is able to draw on an extensive range and depth of experience from the Firm’s network of offices, operating across more than 100 key markets worldwide. Our aim is to provide high-level analytical research services to assist practical decision-making in all aspects of real estate.
The Asia Pacific Research Group monitors rentals, capital values, demand and supply factors, vacancy rates, investment yields, leasing and investment activity, and other significant trends and government policies relating to all sectors of the property market including office, retail, residential, industrial and hotels. We deliver a range of global, regional and local publications as well as research-based consultancy services.
For Research enquiries, contact
James Taylor Head of Research Indonesia +62 21 2922 3888 james.taylor@ap.jll.com
More than ever before, your success depends on the quality of your decisions. As the global leader in real estate
services and money management, JLL is positioned to partner with you to provide the quality advice needed for
making quality decisions. The world’s best real estate intelligence and knowledge base puts our clients in the
best position to make the right decisions.
www.jll.com/research
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